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View Diary: White House might use Medicare reform momentum to push further health care reform (95 comments)

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  •  Gonna be the devil's advocate here (4+ / 0-)

    Let's take two workers.

    Worker A has employer provided coverage. Employer pays Worker A $30,000 in salary, and spends an additional $10,000 on health benefits. Worker A is taxed only the $30K in direct income.

    Worker B is not covered by his employer. However, in recognition of that, and wanting to be competitive for the best skills, the employer pays worker B $40,000. Of this amount, worker B spends about $10,000 on his own health care needs. Worker B is taxed on the entire $40K salary.

    Now, in the interests of fairness - there are two ways to address the imbalance here. One of those is to tax Worker A on both the direct income, and the insurance benefit. The other, of course, is to make Worker B's insurance expense (at least up to some limit) a pre-tax expense.

    "No one life is more important than another. No one voice is more valid than another. Each life is a treasure. Each voice deserves to be heard." Patriot Daily News Clearinghouse & Onomastic

    by Catte Nappe on Mon Jan 07, 2013 at 02:49:59 PM PST

    [ Parent ]

    •  Nice explanation n/t (2+ / 0-)
      Recommended by:
      Catte Nappe, divineorder
    •  I might agree with taxing benefits (1+ / 0-)
      Recommended by:
      Catte Nappe

      once I believe it is in  fact a benefit - but if a significant part of health care cost is in fact overhead and profit, 1) I don't want to pay for it and 2) I certainly don't want to pay tax on what my employer pays for it.

      Depending on the plan, I think that the person in your example who pays for his own insurance can set up an HSA, making his expense pre-tax.  Not sure how that would work with employee benefits.

      The more likely example is that the 2nd company above is not paying benefits in order to be "cost competitive" and isn't worried about being competitive in the job market - especially with unemployment where it is now.  I doubt that companies that don't have benefits actually have premium pay scales.  

      Examples like this help show why tying health care insurance to emloyment is such a bad idea.  We need to find some way to start to separate the two.  Everybody needs affordable insurance - whether or not they are employed and whether or not their employer offers it as a benefit.  And I agree with you that it should be at equal personal cost (maybe risk adjusted in various ways) regardless of employment status.

      All this avoids the big issue - changing who pays for health care doesn't make it cheaper.   We need to control the cost of health care - we pay more per capita and get less for it than anywhere else in the world.  Moving the cost around may "fix" the federal budget - but it doesn't fix the problem.   We don't need to move the cost from employers to employees, or from the federal government to states, or from the government to individuals.  We need to lower the cost, and taxing benefits doesn't do that.

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